House Bill 1099-Fifth Edition

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2009

H 5

HOUSE BILL 1099

Committee Substitute Favorable 5/7/09

Committee Substitute #2 Favorable 5/12/09

Senate Agriculture/Environment/Natural Resources Committee Substitute Adopted 8/4/09
Fifth Edition Engrossed 8/5/09

Short Title: Amend Environmental Laws 2009.		(Public)
Sponsors:
Referred to:

April 7, 2009

A BILL TO BE ENTITLED

AN ACT to amend certain environmental laws to: (1) Extend by one year the implementation of water system efficiency criteria for eligibility for state water infrastructure funds; (2) prohibit the use of high arsenic content glass beads WHEN MARKING STATE OR MUNICIPAL ROADS or public vehicular areas; (3) AMEND THE BERNARD ALLEN MEMORIAL EMERGENCY DRINKING WATER FUND; (4) provide that City and county building inspectors may rely upon a third-party certification for parking lots and any bioretention areas designed and constructed to comply with G.S. 113A-71; (5) modify the nutrient management strategy and adopt a sedimentation strategy for certain drinking water supply reservoirs; (6) PROTECT AND RESTORE WATER QUALITY AND QUANTITY IN THE UPPER NEUSE RIVER BASIN, FALLS LAKE, AND OTHER DRINKING WATER SUPPLY RESERVOIRS BY DIRECTING THE ENVIRONMENTAL MANAGEMENT COMMISSION TO PROVIDE CREDIT TO LOCAL GOVERNMENTS, LANDOWNERS, AND OTHERS WHO REDUCE WATER POLLUTION IN THE UPPER NEUSE RIVER BASIN BEFORE PERMANENT RULES ARE ADOPTED; (7) direct the Revenue Laws Study Committee and the Environmental Review Commission to conduct a study of revenue generating opportunities associated with entities using certain natural resources of the state in order to fund activities that will protect and enhance public health and the environment; (8) limit transfers of water from the Catawba River basin under the Concord and Kannapolis interbasin transfer certificate; and (9) create the yadkin river trust to acquire and operate the yadkin project, an existing hydroelectric facility.

The General Assembly of North Carolina enacts:

SECTION 1. Section 21 of S.L. 2008-143 reads as rewritten:

"SECTION 21. Sections 3, 4, 5, 6, 7, 8, 10, 12, 13, 14, 15, 16, 17, 18, 20, and 21 of this act are effective when this act becomes law. Water Shortage Response Plans revised to comply with G.S. 143-355.2, as enacted by Section 5 of this act, shall be submitted no later than 1 July 2009. Subsection (c) of Section 14 of this act expires when rules adopted pursuant to subsection (b) of Section 14 of this act become effective. Sections 1, 2, and 19 of this act become effective 1 October 2008. Section 11 of this act becomes effective 1 December 2008 and applies to offenses committed on or after that date. Section 9 of this act becomes effective ~~1 July 2009.~~ 1 July 2009, except that subdivision (1) of subsection (b) of G.S. 143-355.4, as enacted by Section 9 of this act, becomes effective 1 July 2010."

SECTION 2.(a) The General Assembly finds and declares that inorganic arsenic is a hazardous substance and is recognized by the United States Environmental Protection Agency and the United States Occupational Safety and Health Administration as a human carcinogen; that release of this substance into the environment may lead to contamination of soil and water; that the ingestion or inhalation of soil, water, plant material, or animal tissues contaminated with inorganic arsenic may lead to lung cancer, damage to the nervous system, or, in extreme cases, death from systemic poisoning; that reflective glass beads are used to reflect light when applied to roadway markers; that glass beads that contain more than 75 parts per million inorganic arsenic may represent a danger to workers who handle and apply them and a contamination potential to soil and water surrounding roadways. The General Assembly therefore determines that it is in the public interest to prohibit the use of glass beads containing more than 75 parts per million inorganic arsenic used to reflect light when applied to markings on roadways.

SECTION 2.(b) Chapter 136 of the General Statutes is amended by adding a new section to read:

"§ 136-30.2. Prohibit the use of high content arsenic glass beads in paint used for pavement marking.

No pavement markings shall be placed on or along any road in the State highway system, in any municipal street system, or on any public vehicular area, as defined in G.S. 20-4.01, that is made from paint that has been mixed, in whole or in part, with reflective glass beads containing more than 75 parts per million inorganic arsenic, as determined by the United States Environmental Protection Agency Method 6010B in conjunction with the United States Environmental Protection Agency Method 3052 modified."

SECTION 3. G.S. 87-98 reads as rewritten:

"§ 87-98. Bernard Allen Memorial Emergency Drinking Water Fund.

(a) The Bernard Allen Memorial Emergency Drinking Water Fund is established under the control and direction of the Department. The Fund shall be a nonreverting, interest-bearing fund consisting of monies appropriated by the General Assembly or made available to the Fund from any other source and investment interest credited to the Fund.

(b) The Fund may be used to pay for notification, to the extent practicable, of persons aged 18 and older who reside in any dwelling unit, and the senior official in charge of any business, at which drinking water is supplied from a private drinking water well or improved spring that is located within 1,500 feet of, and at risk from, known groundwater contamination. The senior official in charge of the business shall take reasonable measures to notify all employees of the business of the groundwater contamination, including posting a notice of the contamination in a form and at a location that is readily accessible to the employees of the business. the personnel and other direct costs associated with developing regional groundwater quality assessments based on groundwater quality from water supply wells, additional testing data indicated by emerging contamination issues, and other sources of groundwater data. The purposes of such groundwater quality assessments shall be to improve public policy for groundwater protection, to develop groundwater quality plans in accordance with G.S. 143-215.8A, and to increase public awareness of the quality of the groundwater supply and the occurrence of groundwater contamination. The Fund may also be used by the Department to pay the costs of testing of private drinking water wells and improved springs for suspected contamination up to once every three years upon request by a person who uses the well and for the temporary or permanent provision of alternative drinking water supplies to persons whose drinking water well or improved spring is contaminated. Under this subsection, an alternative drinking water supply includes the repair or replacement of a contaminated well or the connection to a public water supply.

(c) Up to fifty percent (50%) of the funds available each year may be allocated to developing groundwater quality assessments in accordance with subsection (b) of this section and groundwater quality plans in accordance with G.S. 143-215.8A. The Department shall disburse monies from the Fund for covering the costs for alternative drinking water supplies based only on financial need and on the risk to public health posed by groundwater contamination and shall give priority to the provision of services under this section to instances when an alternative source of funds is not available. The Fund shall not be used to provide alternative water supply to households with incomes greater than three hundred percent (300%) of the current federal poverty level. The Fund may be used to provide alternative drinking water supplies if the Department determines that the concentration of one or more contaminants in the private drinking water well or improved spring exceeds the federal maximum contaminant level, or the federal drinking water action level as defined in 40 Code of Federal Regulations § 141.1 through § 141.571 (1 July 2007) and 40 Code of Federal Regulations § 143.3 (1 July 2007). For a contaminant for which a federal maximum contaminant level or drinking water action level has not been established, the State groundwater standard established by the Environmental Management Commission for the concentration of that contaminant shall be used to determine whether the Fund may be used to provide alternative drinking water supplies. The Fund may also be used to provide alternative drinking water supplies as provided in this section if the Department determines that the concentration of one or more contaminants in a private drinking water well is increasing over time and that there is a significant risk that the concentration of a contaminant will exceed the federal maximum contaminant level or drinking water action level, or the State groundwater standard. A determination of the concentration of a contaminant shall be based on a sample of water collected from the private drinking water well within the past 12 months.

(c1) In disbursing monies from the ~~Fund,~~Fund for alternative drinking water supplies, the Department shall give preference to provision of permanent replacement water supplies by connection to public water supplies and repair or replacement of contaminated wells over the provision of temporary water supplies. In providing alternative drinking water supplies, the Department shall give preference to connection to a public water supply system or to construction of a new private drinking water well over the use of a filtration system if the Department determines that the costs of periodic required maintenance of the filtration system would be cost-prohibitive for users of the alternative drinking water supply.

(c2) If the Department provides an alternative drinking water supply by extension of a waterline, the Department may disburse from the Fund no more than ten thousand dollars ($10,000) per household or other service connection. No more than one-third of the total cost of the project may be paid from the ~~Fund.~~ Fund for any project totaling more than fifty thousand dollars ($50,000). The Department may combine monies from the Fund with monies from other sources in order to pay the total cost of the project.

(c3) The Fund shall be used to provide alternative drinking water supplies only if the Department determines that the person or persons who are responsible for the contamination of the private drinking water well is or are not financially viable or cannot be identified or located and if the Department determines that one of the following applies:

(1) The contamination of the private drinking water well is naturally occurring.

(2) The owner of the property on which the private drinking water well is located did not cause or contribute to the contamination or control the source of the contamination.

(3) The source of the contamination is the application or disposal of a hazardous substance or pesticide that occurred without the consent of the owner of the property on which the private drinking water well is located.

(c4) The Department may use up to one hundred thousand dollars ($100,000) of the monies in the Fund to pay the personnel and other direct costs associated with the implementation of this section.

(c5) The Fund shall not be used for remediation of groundwater contamination.

(c6) Nothing in this section expands, contracts, or modifies the obligation of responsible parties under Article 9 or 10 of Chapter 130A of the General Statutes, this Article, or Article 21A of this Chapter to assess contamination, identify receptors, or remediate groundwater or soil contamination.

(d) The Department shall establish criteria by which the Department is to evaluate applications and disburse monies from this Fund and may adopt any rules necessary to implement this section.

(e) The Department, in consultation with the Commission for Public Health and local health departments, shall report no later than 1 October of each year to the Environmental Review Commission, the House of Representatives and Senate Appropriations Subcommittees on Natural and Economic Resources, and the Fiscal Research Division of the General Assembly on the implementation of this section. The report shall include the purpose and amount of all expenditures from the Fund during the prior fiscal year, a discussion of the benefits and deficiencies realized as a result of implementation of the section, the progress of regional groundwater quality assessments and groundwater quality plans, any recommendations for additional testing parameters for private drinking water wells indicated by regional groundwater assessments, and may also include recommendations for any legislative action."

SECTION 4.(a) G.S. 153A-357(d) reads as rewritten:

"(d) No permit shall be issued pursuant to subsection (a) of this section for any land-disturbing activity that is subject to, but does not comply with, the requirements of G.S. 113A-71. For purposes of this subsection, the inspector may rely upon a third-party certification, provided by the applicant, that the parking lot and any stormwater bioretention area are properly designed and constructed to comply with G.S. 113A-71 in accordance with the guidelines developed by the Department of Environment and Natural Resources. Certification must be provided under seal by a licensed professional engineer or other licensed professional who is recognized as having expertise in the design and construction of pervious parking areas or stormwater bioretention areas, as appropriate."

SECTION 4.(b) G.S. 160A-417(c) reads as rewritten:

"(c) No permit shall be issued pursuant to subsection (a) of this section for any land-disturbing activity that is subject to, but does not comply with, the requirements of G.S. 113A-71. For purposes of this subsection, the inspector may rely upon a third-party certification, provided by the applicant, that the parking lot and any stormwater bioretention area are properly designed and constructed to comply with G.S. 113A-71 in accordance with the guidelines developed by the Department of Environment and Natural Resources. Certification must be provided under seal by a licensed professional engineer or other licensed professional who is recognized as having expertise in the design and construction of pervious parking areas or stormwater bioretention areas, as appropriate."

SECTION 5.(a) Section 3 of S.L. 2005-190, as amended by Section 31 of S.L. 2006-259, reads as rewritten:

"SECTION 3.(a) Applicability of section to certain reservoirs. - This section applies only to drinking water supply reservoirs that meet all of the following criteria as of 1 July 2005:

(1) The reservoir serves a population greater than 300,000 persons.

(2) The Environmental Management Commission has classified all or any part of the water in the reservoir as a nutrient sensitive water (NSW).

(3) Water quality monitoring data indicates that water quality in the reservoir violates the chlorophyll A standard.

(4) The Division of Water Quality of the Department of Environment and Natural Resources has not prepared or updated a calibrated nutrient response model for the reservoir since 1 July 2002.

"SECTION 3.(b) Temporary limitation on increased nutrient loading. - If the Environmental Management Commission determines either that water quality in all or in any part of a drinking water supply reservoir to which this section applies does not meet current water quality standards or that it is likely that water quality will not meet water quality standards at any time prior to 1 July 2010, the Commission shall not make any new or increased nutrient loading allocation to any person who is required to obtain a permit under G.S. 143-215 for an individual wastewater discharge directly or indirectly into that reservoir. This limitation on new or increased nutrient loading allocation shall not be construed to prohibit a person who holds a permit for a wastewater discharge into a drinking water supply reservoir from purchasing a nutrient loading allocation from another person who holds a permit for a wastewater discharge into the same drinking water supply reservoir. This subsection expires with respect to a drinking water supply reservoir when permanent rules adopted by the Commission to implement the nutrient management strategy for that reservoir become effective.

"SECTION 3.(c) Nutrient management strategy. - The Environmental Management Commission shall develop a nutrient management strategy for drinking water supply reservoirs to which this section applies by ~~1 July 2009.~~15 January 2011. The nutrient management strategy shall be based on a calibrated nutrient response model that meets the requirement of G.S. 143-215.1(c5). The nutrient management strategy shall include specific mandatory measures to achieve the reduction goals. ~~The Commission shall consider the cost of the proposed measures in relation to the effectiveness of the measures.~~In developing the nutrient management strategy, the Commission shall consider the effectiveness of measures previously implemented in the watershed and the cost of the proposed measures in relation to their effectiveness. These measures could include, but are not limited to, buffers, erosion and sedimentation control requirements, post-construction stormwater management, agricultural nutrient reduction measures, the addition of nutrient removal treatment processes to point source permitted wastewater treatment plants, the removal of point source discharging wastewater treatments through regionalization and conversion to non-discharge treatment technologies, measures to address nutrient inputs from on-site wastewater treatment systems, control of atmospheric deposition, allowing the sale and purchase of nutrient offsets, allowing trading of nutrient loading allocations and credits for nutrient reductions, and any other measures that the Commission determines to be necessary to meet the nutrient reduction goals. To the extent that one or more other State programs already mandate any of these measures, the nutrient management strategy shall incorporate the mandated measures and any extension of those measures and any additional measures that may be necessary to achieve the nutrient reduction goals. In making a nutrient loading allocation to a permit holder, the Commission shall, to the extent allowed by federal and State law, give consideration to all voluntary efforts taken by the permit holder to protect water quality prior to the development of the nutrient management strategy.

"SECTION 3.(d) Eligibility under the Clean Water Revolving Loan and Grant Act. - The definitions set out in G.S. 159G-3 apply to this subsection. The operator of a wastewater treatment works that is owned by an agency of the State may apply for a loan or grant under Chapter 159G of the General Statutes on the same basis as any other applicant if the operator is a local government unit and if the local government unit operates the wastewater treatment works pursuant to a contract with the State agency that contemplates that the local government unit will eventually acquire ownership of the wastewater treatment works.

"SECTION 3.(e) Implementation; rulemaking. - The Environmental Management Commission shall adopt permanent rules to implement the nutrient management strategies required by this section by ~~1 July 2009.~~15 January 2011. The rules shall require that reductions in nutrient loading from all sources begin no later than five years after the rules become effective. The rules shall require that stormwater management programs to reduce nutrient loading from new development be implemented no later than 30 months after the rules become effective.

"SECTION 3.(f) Reports. - The Environmental Management Commission shall report its progress in implementing this section to the Environmental Review Commission as a part of each quarterly report it makes pursuant to G.S. 143B-282(b)."

SECTION 5.(b) S.L. 2005-190, as amended by Section 31 of S.L. 2006-259, is amended by adding three new subsections to read:

"SECTION 3.(g) Compensatory mitigation for riparian buffer loss; nutrient offset purchases. - Compensatory mitigation for riparian buffer loss in the watershed of a drinking water supply to which this section applies must be performed in the watershed of the drinking water supply. The Environmental Management Commission may further limit the area in which compensatory mitigation for riparian buffer loss must be performed in the watershed of a drinking water supply to which this section applies. Any nutrient offset purchased to offset loading in the watershed of a drinking water supply to which this section applies may only be obtained from an offset project located in the watershed of the drinking water supply. The Environmental Management Commission may further limit the area from which nutrient offsets may be obtained in the watershed of a drinking water supply to which this section applies.

"SECTION 3.(h) Additional standards for land disturbing activities in the water supply watershed. - For purposes of this section, "land-disturbing activity" does not include the land-disturbing activities set out in G.S. 113A-52.01. In addition to any other requirements of State, federal, and local law, land-disturbing activity in the watershed of the water supply reservoir to which this section applies shall meet all of the following design standards for sedimentation and erosion control:

(1) Erosion and sedimentation control measures, structures, and devices shall be planned, designed, and constructed to provide protection from the runoff of the 25-year storm that produces the maximum peak rate of runoff as calculated according to procedures set out in the United States Department of Agriculture Soil Conservation Service's "National Engineering Field Manual for Conservation Practices" or according to procedures adopted by any other agency of the State or the United States or any generally recognized organization or association.

(2) Sediment basins shall be planned, designed, and constructed so that the basin will have a settling efficiency of at least 70 percent (70%) for the 40 micron size soil particle transported into the basin by the runoff of the two-year storm that produces the maximum peak rate of runoff as calculated according to procedures in the United States Department of Agriculture Soil Conservation Service's "National Engineering Field Manual for Conservation Practices" or according to procedures adopted by any other agency of the State or the United States or any generally recognized organization or association.

(3) Newly constructed open channels shall be planned, designed, and constructed with side slopes no steeper than two horizontal to one vertical if a vegetative cover is used for stabilization unless soil conditions permit steeper slopes or where the slopes are stabilized by using mechanical devices, structural devices, or other acceptable ditch liners. In any event, the angle for side slopes shall be sufficient to restrain accelerated erosion.

(4) For an area of land-disturbing activity where grading activities have been completed, temporary or permanent ground cover sufficient to restrain erosion shall be provided as soon as practicable, but in no case later than seven days after completion of grading. For an area of land-disturbing activity where grading activities have not been completed, temporary groundcover shall be provided as follows:

a. For an area with no slope, temporary groundcover shall be provided for the area if it has not been disturbed for a period of 14 days.

b. For an area of moderate slope, temporary groundcover shall be provided for the area if it has not been disturbed for a period of 10 days. For purposes of this subdivision, "moderate slope" means an inclined area, the inclination of which is less than or equal to 3 units of horizontal distance to 1 unit of vertical distance.

c. For an area of steep slope, temporary groundcover shall be provided for the area if it has not been disturbed for a period of seven days. For purposes of this subdivision, "steep slope" means an inclined area, the inclination of which is greater than 3 units of horizontal distance to 1 unit of vertical distance.

"SECTION 3.(i) The Department of Environment and Natural Resources, in consultation with the Environmental Management Commission, shall identify improvements needed in the design, operation, and siting of septic tank systems in order to reduce excess nutrient loading from septic tank systems in the watershed of a drinking water supply to which this section applies. The Department shall report its findings and recommendations for specific changes to standards adopted by the Commission for Public Health pursuant to G.S. 130A-355 to the Commission for Public Health and to the Environmental Review Commission no later than March 1, 2010."

SECTION 6.(a) Concurrent with the permanent rule making required by Section 3 of S.L. 2005-190, as amended by Section 31 of S.L. 2006-259 and Section 5(a) of this act, and pursuant to G.S. 143-215.8B, the Environmental Management Commission shall adopt temporary rules. The Commission shall adopt the temporary rules required by this section by January 15, 2011.

SECTION 6.(b) For purposes of this section, "land-disturbing activity" does not include the land-disturbing activities set out in G.S. 113A-52.01. No later than December 31, 2011, the Sedimentation Control Commission shall adopt rules of statewide applicability for the control of erosion and sedimentation resulting from land-disturbing activities in the watersheds of water supply reservoirs. In developing the rules, the Commission shall consider the standards established pursuant to Section 3(h), as enacted by Section 5(b) of this act.

SECTION 7.(a) Definition. - For purposes of this section, the term "Upper Neuse River Basin" is that portion of the Neuse River Basin upstream of the Falls Dam, including Falls Lake.

SECTION 7.(b) Credit for Early Adoption. - The Environmental Management Commission shall encourage local governments, landowners, and others to develop, adopt, and implement policies and practices to reduce the runoff and discharge of nitrogen, phosphorus, sediment, and other pollutants into the surface waters and drinking water supply reservoirs in the Upper Neuse River Basin before it adopts permanent rules to implement the nutrient management strategy and the turbidity strategy for Upper Falls Lake. The Environmental Management Commission shall, in its permanent rules, provide credit for the early implementation of the nutrient management strategy for the Upper Neuse River Basin and the turbidity strategy for Falls Lake to local governments, landowners, and others who implement policies and practices after January 1, 2007, to reduce runoff and discharge of nitrogen, phosphorus, and sediment in the Upper Neuse River Basin.

SECTION 7.(c) Reports. - The Environmental Management Commission shall report its progress in implementing Section 7 of this act to the Environmental Review Commission as part of each quarterly report it makes pursuant to G.S. 143B-282(b).

SECTION 8.(a) The Revenue Laws Study Committee and the Environmental Review Commission shall jointly study revenue generating opportunities associated with entities in the State that are large-scale users of certain natural resources of the State. In particular, the Committee and Commission shall study all of the following issues:

(1) Impact on the State's citizens and its natural resources from large-scale users of water resources.

(2) The value of the State's water resources.

(3) The feasibility and advisability of imposition of a tax or license upon large-scale users of the State's natural resources.

(4) Potential uses of revenue generated from such a tax or license, including funding river basin modeling activities, flood plain mapping activities, needed public water and sewer improvements, cleanup of contaminated sites, and funding of the Clean Water Management Trust Fund.

SECTION 8.(b) The North Carolina Utilities Commission, the Department of Revenue, and the Department of Environment and Natural Resources shall provide technical expertise and assistance as requested in the conduct of this study.

SECTION 8.(c) The Committee and Commission shall jointly submit a report to the 2009 General Assembly no later than April 1, 2010. This report shall include findings and recommendations, including a proposal for legislation to generate revenue as identified by the study.

SECTION 9. Concord and Kannapolis may not transfer water from the Catawba River Basin pursuant to the Certificate Authorizing the Cities of Concord and Kannapolis to Transfer Water from the Catawba River and Yadkin River Basins to the Rocky River Basin under the Provisions of G.S. 143-215.22I, approved by the Environmental Management Commission on January 10, 2007, and signed into effect on January 25, 2007, unless the Department of Environment and Natural Resources determines that both of the following conditions are met:

(1) Concord and Kannapolis are transferring 10 million gallons per day from the Yadkin River Basin to the Rocky River Basin pursuant to the Interbasin Transfer Certificate.

(2) There are no other practicable water supplies available to Concord and Kannapolis.

SECTION 10.(a) Chapter 77 of the General Statutes is amended by adding a new Article to read as follows:

"Article 9.

"Yadkin River Trust.

"§ 77-150. Yadkin River Trust.

There is established the Yadkin River Trust as a public agency and instrumentality of the State. The purpose of the Trust is to benefit the people of the State as follows:

(1) To develop the Yadkin River in Davidson, Montgomery, Rowan, and Stanly Counties as an instrumentality of intrastate, interstate, and foreign commerce and navigation through the development, sale, and distribution of hydroelectric power.

(2) To ensure the equitable distribution of water for public purposes.

(3) To maintain recreational facilities associated with the Yadkin River.

"§ 77-151. Definitions.

The following definitions apply in this Article:

(1) Board. - The Board of Directors of the Yadkin River Trust.

(2) Trust. - The Yadkin River Trust as established by this Article.

(3) Yadkin Project. - Project No. 2197 as described in a license issued by the Federal Energy Regulatory Commission as of May 1, 1958, and as thereafter amended and otherwise subject to the regulation of the Federal Energy Regulatory Commission.

(4) Yadkin Project License. - The license issued by the Federal Energy Regulatory Commission as of May 1, 1958, which expired on April 30, 2008, the year-to-year annual licenses that have been issued since that time, and any future renewal license for Project No. 2197.

"§ 77-152. Board of Directors.

(a) Appointment. - The Board of Directors of the Yadkin River Trust shall consist of seven directors who shall be appointed by the Governor upon the advice of the Speaker of the House of Representatives and the President Pro Tempore of the Senate and subject to confirmation by the General Assembly by joint resolution. Two of the directors shall have substantial work experience within the operations of electric cooperatives or investor-owned utilities or substantial experience on an electric cooperative board or investor-owned utility board but must not serve as an employee or board member of an electric cooperative or investor-owned utility during their term as directors of the Yadkin River Trust. The names of directors to be appointed by the Governor shall be submitted by the Governor to the General Assembly for confirmation by the General Assembly on or before June 1 of the year in which the terms for which the appointments are to be made are to expire. Upon failure of the Governor to submit names by that date, the President Pro Tempore of the Senate and Speaker of the House of Representatives jointly shall submit the names of a like number of directors to the General Assembly on or before June 15 of the same year for confirmation by the General Assembly. Regardless of the way in which the names of directors are submitted, confirmation of directors must be accomplished prior to adjournment of the then current session of the General Assembly. The Governor may remove any director of the Board for misfeasance, malfeasance, or nonfeasance.

(b) Terms. - The term of office of directors of the Board is four years. A director may be reappointed to any number of successive four-year terms. A director in office continues to serve until the director's successor is duly confirmed and qualified, but the holdover does not affect the expiration date of the succeeding term.

(c) Chair; Vice-Chair. - Upon confirmation of the directors by the General Assembly as provided in subsection (a) of this section, the Governor shall designate one of the directors to serve as chair of the Board for the succeeding four years and until the director's successor is duly confirmed and qualified. Upon death or resignation of the director appointed as chair, the Governor shall designate the chair from the remaining directors and appoint a successor in accordance with this section to fill the vacancy on the Board. The Governor shall convene the first meeting of the Board, at which time the members of the Board shall elect from their membership a vice-chair of the Board.

(d) Vacancies. - In case of death, incapacity, resignation, or vacancy for any other reason in the office of any director prior to the expiration of the director's term of office, the name of the director's successor shall be submitted by the Governor within four weeks after the vacancy arises to the General Assembly for confirmation by the General Assembly. Upon failure of the Governor to submit the name of the successor, the President Pro Tempore of the Senate and the Speaker of the House of Representatives jointly shall submit the name of a successor to the General Assembly within six weeks after the vacancy arises. Regardless of the way in which the names of directors are submitted, confirmation of directors must be accomplished prior to the adjournment of the then current session of the General Assembly. If a vacancy arises in the office of director when the General Assembly is not in session, and the appointment is deemed urgent by the Governor, the Governor may appoint a director to serve on an interim basis pending confirmation by the General Assembly.

(e) Organization of the Board. - The Board shall adopt bylaws with respect to the calling of meetings, quorums, voting procedures, the keeping of records, and other organizational and administrative matters as the Board may determine. A quorum consists of a majority of the members of the Board. No vacancy in the membership of the Board impairs the right of a quorum to exercise all rights and to perform all the duties of the Board and the Trust.

(f) Compensation of the Board. - No part of the revenues or assets of the Trust shall inure to the benefit of or be distributable to the members of the Board or officers or other private persons. The members of the Board shall receive no salary for their services but shall be entitled to receive per diem and allowances in accordance with the provisions of G.S. 138-5.

"§ 77-153. Authority to acquire Yadkin Project and Yadkin Project License.

The Trust may acquire the Yadkin Project License and may pursue transfer of the license at the Federal Energy Regulatory Commission, file an application for a new license, amend the existing license, and take any other actions necessary to become the licensee for the Yadkin Project on behalf of the State. If the Trust acquires the license, it shall promptly thereafter request permission from the General Assembly to issue revenue bonds or other financing authority to enable acquisition and operation of the Yadkin Project. The State may negotiate, pursue transfer of title for property or permits, and execute agreements necessary for acquisition of the Yadkin Project. If the Yadkin Project License and the Yadkin Project are acquired, the Trust cannot agree to voluntarily surrender, terminate, transfer, or sell the Yadkin River License or the Yadkin Project unless an act of the General Assembly approves the action.

"§ 77-154. Operation of the Trust.

(a) Management. - The Board shall determine the policies of the Trust by majority vote of the members of the Board present and voting, a quorum having been established. Once a policy is determined, the Board must communicate it to the executive director, who shall have the sole and exclusive authority to execute the policy of the Trust. No member of the Board has the responsibility or authority to give operational directives to any employee of the Trust other than the executive director.

(b) Employees. - The Board shall appoint an executive director, whose salary is fixed by the Board, to serve at its pleasure. The executive director or a person designated by the executive director shall appoint, employ, dismiss, and, within the limits of available funding, fix the compensation of other employees as considered necessary. During any fiscal year, the Trust may not expend funds for merit and performance-based salary increases in excess of the funds that would have been expended had the employees of the Trust received the same across-the-board salary increases granted by the General Assembly to State employees subject to the State Personnel Act. These merit and performance-based salary increases may be awarded on an aggregated average basis according to rules adopted by the Trust. Except as to the provisions of Articles 6 and 7 of Chapter 126 of the General Statutes, the employees of the Trust are exempt from the State Personnel Act.

(c) Consultants. - The Board may employ consulting engineers, architects, attorneys, real estate counselors, appraisers, and other consultants as needed.

(d) Operator. - The Board may enter into a contract with an investor-owned utility, electric membership corporation, or other qualified third party with experience in the operation of electric generating facilities to operate the Yadkin Project on behalf of the Trust, provided that such contract does not abrogate the duties of the Trust as established by G.S. 77-156 and is otherwise consistent with the provisions of this Article.

"§ 77-155. Powers of the Trust.

The Trust has all the powers necessary to execute the provisions of this Article, including the following:

(1) To adopt, alter, or repeal its bylaws and adopt, amend, or repeal rules to implement the provisions of this Article. The Trust and its activities are not subject to review or approval by the North Carolina Utilities Commission.

(2) To sue and be sued, to make contracts, to adopt and use a common seal, and to alter the adopted seal as needed.

(3) To contract and enter into agreements with the State, local governments, other authorities of North Carolina, and other states for the interchange of business and to facilitate the business of the Trust.

(4) To procure and maintain adequate insurance or otherwise provide for adequate protection to indemnify the Trust and its officers, directors, agents, employees, adjoining property owners, or the general public against loss or liability resulting from any act or omission by or on behalf of the Trust.

(5) To establish, purchase, construct, operate, and regulate hydroelectric facilities on the Yadkin River to implement the provisions of this Article.

(6) To manufacture, produce, and generate hydroelectric power using the waters of the Yadkin River and to sell the hydroelectric power to utilities within and without the State of North Carolina.

(7) To acquire, purchase, establish, build, construct, maintain, equip, and operate any structure or facilities necessary, useful, or customarily used and employed in generation of hydroelectric power.

(8) To seek enforcement of environmental laws and contribution to environmental cleanup costs, consistent with its obligations under this Article.

"§ 77-156. Duties of the Trust.

(a) If the Trust acquires the Yadkin Project and Yadkin Project License as provided in this Article, the Trust must:

(1) Conduct environmental site assessments of all properties located in the Yadkin River Basin currently or formerly owned and operated by Alcoa Power Generating, Inc., or Alcoa, Inc., or their subsidiaries, to the extent necessary to evaluate risks to public health or the environment posed by contamination at or emanating from such properties. The Trust shall pursue remediation of such properties to levels sufficient to allow the unrestricted use of such properties, including, to the extent necessary, by taking legal action against the parties responsible for such contamination.

(2) Conduct environmental site assessments of hazardous waste sites that were associated with the disposal of waste materials from the Badin Works site, excluding properties owned or under the control of Alcoa Power Generating, Inc., Alcoa, Inc., or their subsidiaries. The Trust shall pursue remediation of such properties described to levels sufficient to support the unrestricted use of such properties, including, to the extent necessary, by taking legal action against the parties responsible for such contamination.

(3) Institute operational changes to the Yadkin Project that will retain more water in Badin, Falls, High Rock, and Tuckertown Lakes and provide a consistent flow of water to downstream water users.

(4) Apportion up to twenty-five percent (25%) of the net proceeds from the Yadkin Project's electrical output for use by a regional "Power for Jobs" fund to be established by the Department of Commerce. The Power for Jobs fund may make grants to businesses and not-for-profit corporations to create or retain jobs in the Yadkin River Basin.

(5) After performance of subdivisions (1) through (4) of this subsection, compliance with subsection (b) of this section, and retention of any necessary operating reserves, the Trust shall utilize up to twenty-five percent (25%) of the remaining annual net revenues from the Yadkin Project to make grants to the Community Colleges System Office for allocation by the State Board of Community Colleges for instructional equipment at the community colleges as determined by the State Board.

(6) After performance of subdivisions (1) through (5) of this subsection, compliance with subsection (b) of this section, and retention of any necessary operating reserves, the Trust shall utilize the annual net revenues from the Yadkin Project exclusively to fund projects to protect and improve the health of the Yadkin River and the water quality in the Yadkin River Basin.

(b) If the Trust acquires the Yadkin Project and Yadkin Project License as provided in this Article, the Trust must, to the maximum extent practicable, comply with all terms and conditions of the Relicensing Settlement Agreement filed with the Federal Energy Regulatory Commission on May 7, 2007, for the Yadkin Project and shall assume, to the maximum extent practicable, all rights and obligations of the Licensee as provided in the Agreement.

"§ 77-157: Reserved for future codification purposes.

"§ 77-158. Use of revenues.

Revenues from the Yadkin River Project must be used to pay the following obligations:

(1) To operate the Yadkin Project.

(2) To fulfill the duties under G.S. 77-156.

"§ 77-159: Reserved for future codification purposes.

"§ 77-160. Report; audit.

(a) Report. - The Trust must submit a report regarding its operations and transactions for the preceding fiscal year to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Utility Review Committee, and the House and Senate Committees on Appropriations on or before July 1 of each year. The annual report must include the following information:

(1) The amount of power and energy produced by the Trust.

(2) The Trust's financial statements for the preceding fiscal year, prepared in accordance with generally accepted accounting principles.

(3) The price of power and energy sold by the Trust.

(4) The amount of water distributed to each entity or water user.

(5) The status of environmental testing, assessment, and remediation of contamination at the Badin Works and other sites located in Stanly County.

(b) Audit. - The operations of the Trust are subject to the oversight of the State Auditor under Article 5A of Chapter 147 of the General Statutes.

"§ 77-161. Conflicts of interest.

A director, officer, or employee of the Trust who has a conflict of interest in a contract with the Trust must disclose this interest to the Board, and the Board must note the conflict of interest in its minutes. The director, officer, or employee who has a conflict of interest may not participate on behalf of the Trust in the authorization of that contract. Failure to take the actions required by this section does not affect the validity of any bonds or notes issued by the Trust.

A director, officer, or employee of the Trust has a conflict of interest if any one or more of the following applies:

(1) The director, officer, or employee has a direct or indirect interest in a contract with the Trust.

(2) The director, officer, or employee is an officer or employee of a firm or corporation, not including a unit of local government, that has a direct or indirect interest in a contract with the Trust.

(3) The director, officer, or employee has an ownership interest in a firm or corporation that has a direct or indirect interest in a contract with the Trust."

SECTION 10.(b) Notwithstanding G.S. 77-152, as enacted by Section 10(a) of this act, in order to provide for the staggering of the terms of the Board of Directors of the Yadkin River Trust, the terms of the initial appointments of the directors made by the Governor shall be made as follows: (i) two shall be for a period of two years; (ii) two shall be for a period of three years; and (iii) three shall be for a period of four years.

SECTION 10.(c) G.S. 66-58(b) is amended by adding a new subdivision to read:

"(b) The provisions of subsection (a) of this section shall not apply to:

…

(27) The Yadkin River Trust, established in G.S. 77-150."

SECTION 10.(d) G.S. 126-5(c1) reads as rewritten:

"(c1) Except as to the provisions of Articles 6 and 7 of this Chapter, the provisions of this Chapter shall not apply to:

…

(30) Employees of the Yadkin River Trust."

SECTION 10.(e) G.S. 150B-1(c) reads as rewritten:

"(c) Full Exemptions. - This Chapter applies to every agency except:

(1) The North Carolina National Guard in exercising its court-martial jurisdiction.

(2) The Department of Health and Human Services in exercising its authority over the Camp Butner reservation granted in Article 6 of Chapter 122C of the General Statutes.

(3) The Utilities Commission.

(4) The Industrial Commission.

(5) The Employment Security Commission.

(6) The State Board of Elections in administering the HAVA Administrative Complaint Procedure of Article 8A of Chapter 163 of the General Statutes.

(7) The North Carolina State Lottery.

(8) The Yadkin River Trust, established in G.S. 77-150."

SECTION 10.(f) The General Assembly strongly encourages the continuation of discussions between the State of North Carolina, Alcoa Power Generating, Inc., and other interested parties to explore potential settlement of the dispute concerning the Federal Energy Regulatory Commission license for and operation of the Yadkin Project. The Department of Justice shall report to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Utility Review Committee on or before July 1, 2010, on the status of the matter.

SECTION 10.(g) The Secretary of Commerce shall present a detailed business plan for the operation of the Yadkin River Trust to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Utility Review Committee on or before March 1, 2010.

SECTION 10.(h) With the exception of G.S. 77-154(d), as enacted by Section 10(a) of this act, the provisions of this act shall not apply to any investor-owned utilities regulated by the North Carolina Utilities Commission.

SECTION 10.(i) If the Federal Energy Regulatory Commission issues a new multiyear license to Alcoa Power Generating, Inc., for the Yadkin Project No. 2197, the provisions of this act shall expire upon issuance of that license.

SECTION 11. Section 2 of this act becomes effective October 1, 2009, and applies to any contracts for road projects entered into, or any pavement remarking that takes place, on or after that date. Section 4 of this act is effective retroactively to April 1, 2009. Section 3(h) of S.L. 2005-190, as enacted by Section 5(b) of this act, becomes effective January 1, 2010, applies to land-disturbing activities begun on or after January 1, 2010, and expires on the date that rules adopted pursuant to Section 6(b) of this act become effective. The remaining sections of this act are effective when this act becomes law.